South African consumers had a cash hangover in January. Statistics released by the Spark Cash Index indicate that citizens significantly reduced their spending during January 2013, following a record increase in cash withdrawal activity in December 2012.
The SCI, a gauge of the average value of cash withdrawals at more than 2,000 Spark ATMs across South Africa, recorded a month-on-month drop of 9.18 percent in average cash withdrawal figures for January 2013.
According to Marc Sternberg, managing director of Spark ATM Systems, the steep drop in the withdrawal values during January is in keeping with recorded SCI ATM withdrawal patterns over the past five years.
"Historically, following a surge in spending over the festive season, January is the month when consumers often adopt a more conservative spending approach, especially with mandatory expenses on the horizon such as school fees and related costs," he said.
The SCI did show significant year-on-year growth of 5.43 percent for January. Ronel Oberholzer, principal economist at IHS Global Insights, said this can be seen as a positive sign. "Comparing to last year's levels (2.65 percent year-on-year growth), consumers are currently in a better situation. However, I suspect that we will soon see a slowing in the rate of increase."
According to Sternberg, average monthly cash withdrawal figures will regain positive momentum in late March 2013. "This is due to the Easter holiday period occurring earlier this year, which is historically synonymous with increased retail activity nationwide."
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